Traveling back to 1977

Chapter 725 Gossip
Chen Fan went and returned quickly, bringing back Zhou Zhengdong and Zhou Yali's luggage, as well as the two little monkeys that Zhou Yali had been longing for.

More than a month has passed, and the little monkey has grown a little bit.

Golden monkeys are not big to begin with, and they really have only grown a little bit. They are still small, cute, and charming, which completely captivated Shen Xueyi, who was seeing a monkey for the first time.

Dinner was at the Jiang family's house. Although Chen Fan was the best cook, he couldn't be asked to cook today.

Before the official marriage, he can only be considered a guest when he visits. Once the marriage certificate is obtained, they will be a family, and it won't be too late for him to handle the arrangements.

Besides him, the best cook is Jiang Lili.

Today, Jiang Lili was the head chef, with Jiang Tiantian assisting. The two sisters worked together seamlessly to prepare another reunion dinner.

Unlike lunchtime, when Zhou Zhengdong spent the whole time talking with Master Lu about music, chess, calligraphy, painting, and customs of the Republic of China, while Chen Fan was ignored by everyone, Jiang Heng also brought Chen Fan in and had a long talk with Zhou Zhengdong about the American textile market.

Zhou Zhengdong, sipping the osmanthus wine that Chen Fan had brought over, said to Jiang Heng, "I understand what you mean. You want the cotton mill's products to be exported to generate foreign exchange, right?"

Jiang Heng nodded and said with a smile, "To be honest, almost every production unit in the country wants to export and earn foreign exchange. Earning foreign exchange can not only improve our production capacity, but also enhance our reputation and obtain more resource allocation. Our cotton mill is no exception."

Zhou Zhengdong put down his wine glass, looked at him with a hint of curiosity, and said, "In-law, I have a question, I don't know if it's convenient."

Jiang Heng spread his hands and said, "The cotton mill is not a classified unit. There is nothing that cannot be said to people. Please speak."

At this moment, Chen Fan suddenly put down his chopsticks, looked at Jiang Heng seriously, and said, "Uncle Jiang, I must refute what you said."

Upon hearing this, Jiang Heng wasn't angry; instead, he showed some curiosity. "Is there a problem?"

Chen Fan glanced at Zhou Zhengdong, then turned to Zhou Zhengdong and said, “Uncle Jiang, you may not be aware that in foreign countries, almost all factories are not fully open to the public. They only open up the finished products, never the entire production line, and they certainly don’t show their laboratories to outsiders.”

These locations are the absolute core of a manufacturing company. Abroad, all production technologies have value, which is what we call patents.

To give you an example, if Yunhu Cotton Mill produces a brand new fabric that is very popular, then this fabric is the patent of the cotton mill. Once the patent is obtained, other factories cannot produce this fabric unless they obtain a patent license certificate from the cotton mill.

Once a cotton mill obtains this exclusive patent, it can reap huge profits by producing this fabric. Conversely, if the patent is leaked and other manufacturers register and produce it first, even the cotton mill itself will no longer be able to produce this fabric.

This is patent protection.

After listening to Chen Fan's explanation, Jiang Heng frowned deeply. "Isn't what you're describing a capitalist practice?"

Before Chen Fan could speak, he continued, "It's not like that in China. I remember that the two cars you designed for the machinery factory were taken by the Ministry of Machinery Industry. Any factory in the country could ask for the blueprints and produce those cars."

The same applies to our cotton mill. Currently, all our spinning and weaving technologies are provided by the provincial department, which also sent technicians to provide guidance. This has enabled our cotton mill to establish itself and grow stronger.

If everyone cherishes their possessions, how can society develop?

Chen Fan smiled helplessly and could only explain, "I was talking about overseas. If foreign clients come to visit, you shouldn't show them everything."

There's no way around it; that's just how society is now. Jiang Heng is telling the absolute truth. Anyone who doesn't share their technology is going against the tide, and their superiors will be criticized. In the end, they'll have to contribute their technology.

Previously, Jiang Heng and several leaders from the provincial department went to investigate the production of down jackets. They went to the door with a clear conscience and openly asked for production technology, and the other party politely offered it to them.

If they don't give it to them, once the provincial department leaders return, they can send a letter to the other provincial department in the name of their unit, or even send a telegram to the Ministry of Light Industry. I don't know how many people will be implicated.

This very habit led to situations where, even when the vice president intervened personally, things remained deadlocked after the 80s.

The company that produced the counterfeit technology even blatantly questioned, "These are all government-owned technologies, so why can they use them but we can't?"

The vice president patiently explained, "That's something the factory spent money and effort to research and develop; it's valuable and can't be used for free. Otherwise, who would be willing to do research and development?"

But they didn't care. They said confidently, "We can give them our technology too. Technology is shared nationwide, and it's always been like this. Why can't it be done now? Besides, for research and development, we can just ask the ministries to assign tasks. Once they assign tasks, who would dare not to do them?"

The vice president really wanted to explain to them the relationship between the market and R&D. It's not that you can just assign a task and expect the product to be popular. Instead, you need to conduct preliminary market research and later product development. It takes a lot of time, effort, and money to produce a good product.

The person covered their ears and shouted, "I won't listen, I won't listen!"

Afterwards, they even invited retired veterans out to reason with them.

The boss was furious, but there was nothing he could do.

This very characteristic became one of the reasons why many of my country's traditional crafts were later stolen.

The reason for this gradual change was that after the new millennium, my country joined the WTO, and its export economy surged. In order to be reasonable and compliant, it had to cater to international rules and begin to pay attention to patents.

So at this moment, Chen Fan was somewhat amused and exasperated when faced with Jiang Heng's bewildered expression.

These are veteran college graduates with higher education; imagine how stubborn they would be if they were cadres who started from humble beginnings.

Fortunately, Jiang Heng was, after all, highly educated and more open to new ideas. When Chen Fan said it was a foreign rule, he stopped arguing and turned to look at Zhou Zhengdong. Although he didn't say anything, his meaning was clear.

Is that really the case?

Zhou Zhengdong would naturally not undermine his nephew, and that was indeed the case.

He grinned and said, "That's true. My family owns a trading company and has been engaged in international trade for many years. We've also been involved in quite a few patent disputes, which is one of the reasons why I chose law as my major."

He paused for a moment, then continued, "Take my trading company as an example. When making international purchases, we usually require manufacturers to provide patent certificates for their products, including technical patents or design patents."

If the patent is not your own invention, then you need to provide proof of patent authorization.

If neither of these applies, then it must be proven that the product is not protected by a patent. Otherwise, we will fully assess the risks. If it is a general product, we will abandon the purchase and choose another manufacturer. If it is a product with great market potential, we can also include risk exclusion clauses in the contract.

In other words, if a patent dispute arises because of this product, the manufacturer will bear all legal responsibility and will be liable for any losses incurred as a result.

After explaining to him, Zhou Zhengdong added, "If I want to purchase your cotton mill's products now, then similarly, I will need you to provide patent certification documents."

However, there are currently no relevant laws in China, not even patent certification, which you obviously cannot provide. Therefore, I can only request that relevant disclaimers be included in the contract to eliminate my legal risks.

Chen Fan listened from the side, his lips twitching. Zhou Zhengdong's words weren't inherently wrong, but in the 8s and 90s, some foreign scoundrels took advantage of the lack of awareness about intellectual property rights in China, exploiting this loophole to set traps for domestic companies, causing considerable harm to many organizations. It's important to understand that at that time, many old state-owned and collective enterprises were already struggling to survive due to their unfamiliarity with market rules, outdated products, and chaotic management.

When they step into the trap, it won't be the last straw that breaks the camel's back, but a huge boulder.

When factories close down and employees are laid off, many people don't even get severance pay. That's when you're left with no one to turn to for help.

But what can we do?

Even the vice president is at a loss when it comes to regulating the company's technology patents, so what can Chen Fan do?
At most, I'll write a few articles on this topic later, both factual and cautionary, to see if it can make some leading cadres more vigilant.

Some people say that since there are no relevant regulations in China, why not just openly imitate foreign products?
There's no problem in theory or practice. In fact, back in the 1990s, many of my country's products were directly copied from foreign ones.

Since those counterfeiters can copy domestic products, they naturally won't give up on foreign products either.

Moreover, relevant laws had already been enacted at that time.

But it didn't work!
Before intellectual property legislation, this product could only be sold domestically, and there would be absolutely no foreign purchases, because once it went abroad, it had to comply with local rules, and if you dared to purchase it, the patent holder would hold you accountable.

After the legislation was enacted, these products acquired a professional term: "parallel imports"!
Domestically, it's still considered shoddy; it's unacceptable abroad. If exposed, it will be investigated—it's that simple.

Shaking his head slightly, Chen Fan held his wine glass and drank with his uncle and future father-in-law.

After downing a glass of wine, Jiang Heng pondered for two seconds and said, "I understand what you mean. Here's what we'll do: I'll put together a product list later, and when you come over next time, we can see if there's anything suitable."

Zhou Zhengdong didn't refuse and readily agreed, "No problem."

At this moment, Chen Fan suddenly smiled and said, "Actually, there is a way to solve the patent problem very well."

The two looked at him together. "What method?"

Chen Fan turned to look at Zhou Yali, who was chatting happily with the two sisters and Shen Xueyi, then turned back and said in a low voice, "For example, Uncle, after you go back to the United States, let Yali set up a company. You can decide the scope of business, as long as it includes clothing design and manufacturing."

Then I'll have someone draw up design sketches of the clothing produced in Lujiawan and send them to you..."

The rest is self-explanatory.

Zhou Zhengdong slapped his thigh and chuckled, "I know the rest. I'll register the design drawings as a design patent, and then place production orders with Lujiawan Garment Factory in the name of this company. The patents will all be mine, so I won't need you to provide patent certificates or add any risk clauses."

He turned to look at Jiang Heng and said, "Actually, you can also adopt this model. You just need to register a company in a member country of the World Intellectual Property Organization and then operate in the same way to resolve the patent issue."

Jiang Heng frowned slightly. "Register a company abroad?"

He shrugged, "We don't have that authority!"

Zhou Yadong has also learned about the situation of domestic organizations recently. One is one, and two is two. Two cannot do the work of one, and one cannot replace the function of two.

Hearing Jiang Heng's words and considering the reality, he frowned slightly, sighed, turned to look at Chen Fan, and said softly, "It seems that reform is very necessary."

A strange expression appeared on Chen Fan's face.

He was certainly aware of the reality, but currently many people didn't know how to reform. In another year or two, this rigid, one-to-one approach would be broken.

Taking away other people's jobs seems to have become a shortcut for many factories to reform.

I manufacture machines, including textile machines, so setting up a textile factory shouldn't be a problem, right?

I work at a meat processing plant and have a lot of meat at home. Is it possible for me to start a canning factory?
In this way, some profitable companies were even able to build a self-sufficient industrial chain, which can be considered a major feature of the era.

Jiang Heng picked up his wine glass and drank, feeling much better.

Although cotton mills cannot directly register patents, receiving Zhou Zhengdong's purchase commitment is a great thing. At most, they can add a risk clause to the contract. Anyway, he knows the situation of his own products very well and is not afraid of patent disputes at all.

Moreover, the Lujiawan Garment Factory and the cotton mill have a deep cooperative relationship. The Zhou family's cooperation with them is equivalent to indirectly cooperating with the cotton mill. ... The Lujiawan Garment Factory is a collective enterprise and does not have direct export rights. It is possible that the cotton mill will have to sign the contract in the future. The import and export company must leave some foreign exchange quota for the cotton mill!
Just as Jiang Heng was drinking and lost in thought, Zhou Zhengdong put down his chopsticks and asked softly, "In-law, I've noticed that many of your companies are vying to export and earn foreign exchange. What are the benefits of this?"

Jiang Heng put down his wine glass, looked at him and smiled, "Of course there are benefits. Factories that can export will be given priority by their superiors. They will be provided with the most advanced equipment, the best technology, and even the talents assigned after graduating from university. There are many benefits."

Zhou Zhengdong said "Oh," and then asked, "What about foreign exchange? Do you have the authority to dispose of it?"

Jiang Heng shook his head slightly, "No, that's not the case. However, if it's a foreign exchange earning unit, they will be given priority approval if they want to apply for the use of foreign exchange."

He paused for a moment, then said thoughtfully, "I have heard a claim, but I'm not sure if it's true."

He looked at Zhou Zhengdong and said with a smile, "It's just a rumor. I heard that many companies that generate foreign exchange have reported to their superiors, hoping to return a portion of the foreign exchange earned from their export products. I don't know if it's true or not, but that's what everyone's saying."

If this news is true, then even more organizations will likely be eager to earn foreign exchange. After all, many advanced equipment items require foreign exchange to purchase, and having control over foreign exchange reserves would bring even greater benefits.

Upon hearing this, Chen Fan suddenly remembered that the foreign exchange retention system was implemented in August of this year (1979).

As for the retention ratio...?
Chen Fan tapped his head and began to use his clever brain to search for information.

If I remember correctly, the retention rate for remittances is 30% to 40%, and the same rate applies to non-trade foreign exchange retention. Trade retention is 25%, and some border regions can retain half, or 50%. The happiest regions are the South China Sea, Tibet, and special economic zones, which can retain the full amount.

In 86, some of the foreign exchange retention system was revised, allowing local governments to retain 50% of the quota for foreign exchange earning units. From that time on, all units took pride in being able to earn foreign exchange.

Chen Fan held the wine glass, lost in thought.

So, what form of foreign exchange earnings does exporting one's own novels count as? Trade or non-trade?

Regardless of the type, you can keep at least a quarter of it.

Since Xiaobenzi wanted to write a new category, he decided to submit the manuscript after August.

Comics and novels sell far better than serious literature. Plus, with the other party promising me the most generous signing deal, how could I not easily earn several million dollars? It would be a waste of all the hard work I put into transporting these little books!
Wow, back then I had hundreds of thousands or even millions of dollars in my hands, that was awesome!
(End of this chapter)